Exxon guns for all-time profit record

Exxon could post the biggest profit ever for a U.S. company on the back of $100 oil.

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NEW YORK (CNNMoney.com) -- Exxon Mobil, the world's largest publicly traded oil company, is within striking distance of setting an all-time profit record - again.

Analysts are expecting the company to post solid quarterly and full-year earnings next Friday (see correction below) - and if the results top forecasts, Exxon (XOM, Fortune 500) could end up reporting the highest profit ever for a U.S. company.

With oil prices having recently crossed the $100 a barrel threshold, it comes as no surprise that Exxon is a whisker away from setting a new milestone.

"Exxon is likely to have record quarterly earnings," said Fadel Gheit, a senior energy analyst at Oppenheimer. "For every $1 [increase] in the price of oil, Exxon makes [another] $125 million for the quarter."

When asked if Exxon could top profit records, another analyst said: "That's not out of the realm of possibility."

The company is expected to earn $10.37 billion in the fourth quarter, according to earnings tracker Thomson Financial. That's about $330 million shy of Exxon's previous quarterly profit record of $10.7 billion set in the fourth quarter of 2005 - which also was a record for any U.S. corporation.

Exxon is expected to make $39.2 billion for all of 2007, just shy of its previous record of $39.5 billion in 2006, which breaks down to the company earning about $75,000 a minute.

If ConocoPhillips is any indication, Exxon should have no trouble meeting - and beating - estimates.

Conoco (COP, Fortune 500), the nation's third largest oil company, trounced profit estimates by nearly 25 percent when it reported Wednesday morning.

Number two Chevron (CVX, Fortune 500) is also expected to do well. Analysts are expecting a 30 percent increase in earnings per share when it reports next Friday.

High crude prices have been the main factor behind the massive profits at oil firms.

Crude prices averaged $90 a barrel the fourth quarter, up 50 percent from the same period in 2006. They jumped 20 percent from the third quarter of 2007.

"That's what's really driving it here," said Robert Plexman, an analyst at CIBC World Markets.

Natural gas prices have also increased compared to last year, albeit marginally.

But costs have also increased for the oil companies, and they haven't been able to make as much selling gasoline, which is why profits haven't risen as rapidly as crude prices.

Slack demand for gasoline in the latter half of last year kept gas prices from rising as much as crude prices. Big oil companies that both pump oil and refine crude into gasoline have to spend more for crude but are unable to pass on all the extra cost to consumers, which eats in to gasoline profit margins.

That was the main reason oil companies reported earnings in the third quarter of 2007 that fell from the prior year. But profit on gas sales has improved somewhat in the fourth quarter, so it shouldn't be as big of a drag on earnings.

Finding oil has also become more costly. The oil boom has led to a surge in exploration and drilling activity, which has pushed up the price for skilled workers and equipment.

Furthermore, new supplies of oil are increasingly difficult to find and generally tend to be located in harder to reach - and hence more expensive - places. The new natural gas field discovered this week by Brazil's Petrobras lies under three miles of ocean.

Analysts say the big oil companies are having a hard time finding new oil.

"The big issue everyone will be looking for is production numbers," said Wesley Ralston, an integrated oil analyst at the New Orleans-based investment bank Howard Weil. "It's tough to offset the natural decline curve."

Correction - an earlier version of this story misstated when Exxon is set to report.